Portuguese lender Banco Espírito Santo has performed spectacularly badly since its €1 billion ($1.36 billion) rights issue in May. The thinly traded shares have tumbled 50% to below the level of what was a deeply discounted rights price.

The bank has been battered by financial problems and accounting irregularities in the network of companies linked to its biggest shareholder, which has spooked investors across Portugal's markets. However, it isn't alone in performing badly among freshly issued European financial stocks, as the sector fell again Thursday after shares in Banco Espírito were suspended.

One factor making banks' share prices vulnerable is the worry that a whole constituency of investors is getting out.

The final quarter of last year and the first quarter of 2014 attracted a wave of buying from non-European investors, mainly out of the US. That was inspired by a simple macroeconomic bet that eurozone policies would help kick-start some sort of recovery and that bank stocks were extremely cheap.

A series of bank rights issues and even some initial public offerings gave these investors the perfect chance to make some quick bucks by buying at a discount and then moving on within a few weeks or months, as confidence in banks returned and valuations rose.

US investors made up 50% or more of the demand for many stock sales, say bankers involved in the deals, but they add that their interest peaked in early May and has since waned. The MSCI European banks index has fallen 8% over the past month.

Of the six major rights issues by banks in Europe this year, all have seen share prices decline since the deals. Two of those, Banco Espírito and Raiffeisen Bank International of Austria, which is exposed to foreign-currency loans in Eastern Europe, are trading below where their rights issues were priced.

In Italy, Banco Popolare and Banco Monte dei Paschi di Sienna have seen their share prices fall steeply, while Banco Popolare di Milano saw its shares rise strongly for two weeks before falling back to where they started. Even Deutsche Bank, which increased the size of its deal because demand was strong, has seen its stock drift 10% lower since.

Related

Floats of businesses that were cleaned up and spun off from larger banks at hefty discounts to book value haven't fared brilliantly either. TSB Banking Group in the UK and NN Group in the Netherlands saw good performance in their first days, but that was followed by quick profit-taking. UniCredit's FinecoBank has been trading only a week, but is showing similar symptoms.

Europe's recovery remains anemic at best, and the European Central Bank's room for manoeuvre is limited in providing further stimulus. Banks are always a leveraged expression of underlying economic health. Not every investor buys the US-led hot-money theory. But with more bad news emerging Thursday about Banco Espírito, investors don't need much of an excuse to go cool on banks across Europe once more.